Life Sciences Blog

Managed entry agreements: Insights from ISPOR Europe meeting




Having just returned from the 18th Annual European Congress of the International Society for Pharmacoeconomics and Outcomes Research (ISPOR) in Milan, I’m still thinking over the content of the many interesting presentations and new ideas discussed at the meeting. Among the different issues discussed, however, one set of research findings on payer uncertainty in managed entry agreements clearly stands out for me.

Behind this cumbersome name is a new approach to evaluating the level of risk associated with the market access for new drugs, developed by the NICE Decision Support Unit at the University of Sheffield. Significantly, the university was commissioned to do this research by NICE – the highly influential UK HTA agency – and I expect that NICE will adopt some version of the model created by the University of Sheffield research group to determine whether a managed entry agreement is needed and precisely how this agreement should be structured.

To provide a bit of background to the research, a managed entry agreement (MEA) is any arrangement that provides coverage for a drug subject to certain conditions: typically additional research or price reductions – and the price reduction may or may not be linked a specific health outcome.  Thus, the patient access schemes (PAS) commonly used in the United Kingdom fall within the definition of MEA, regardless of whether they are discount-based or outcomes-based. The research was driven by a recognised need by NICE  to develop a framework to allow MEAs to be assessed “systematically, consistently and appropriately by appraisal committees”. The purpose was to find a way of quantifying the risk associated with uncertain decisions and also to quantify the reduction in that risk if a specific type of MEA is recommended by NICE.

MAE assessment framework
Under the framework developed at the University of Sheffield, there are three types of risk:

  • Payer Uncertainty Burden (PUB):a measure of decision risk, given current evidence and price. It measures the probability of making the wrong decision and the consequences of making the wrong decision
  • Payer Strategy-Risk Burden (PSB):a measure of the strategy-specific risk, given current evidence and price. It measures the risk of recommending a particular strategy that is not expected to be the most cost effective given current evidence and price
  • Payer Strategy-Risk + Uncertainty Burden (P-SUB):the sum of the strategy-risk and uncertainty burden. It measures the consequences of recommending a particular strategy under unresolved uncertainty

In her presentation, Sabine Grimm depicted the level of PUB in blue and the level of PSB in red. Simply put, a lot of red requires price adjustment to reduce the risk. A lot of blue suggests that additional research is needed – although the PUB could also be reduced by offering a price discount

This framework was used to assess the need for MEAs in 8 past NICE drug technology appraisals. The framework was successfully applied in these case studies and according to the research team allows for easy calculation of the PUB, the PSB and the PSUB using standard cost effectiveness analysis and probabilistic sensitivity analysis.

Practical Implications
While this framework would be certainly useful for NICE, it should also be beneficial for pharmaceutical companies. They can use the same framework to calculate the levels of risk and assess whether NICE would require a MEA and what type of MEA for their drug. They can also themselves see in which cases additional clinical data may reduce the need for offering a price discount in order to secure reimbursement. The same framework can be also used for the evaluation of risk for medical devices, which would certainly be a benefit for manufacturers.

Milena Izmirlieva is head of the research team at IHS Life Sciences.
Posted 13 November 2015

About The Author

Milena Izmirlieva is head of the Life Sciences research team at IHS Markit. Her areas of expertise include market access, pricing and reimbursement, HTA, generics and biosimilars, corporate strategies, and pharma promotion and advertising.